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Harbinger Group Inc Reports Operating Results (10-Q)

May 13, 2011 | About:
10qk

10qk

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Harbinger Group Inc (HRG) filed Quarterly Report for the period ended 2011-04-03.

Harbinger Group Inc. has a market cap of $879.8 million; its shares were traded at around $6.32 .
This is the annual revenues and earnings per share of HRG over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of HRG.


Highlight of Business Operations:

During the Fiscal 2011 Quarter, global consumer battery sales decreased $10 million, or 5%, primarily driven by decreased Latin America net sales of $8 million. The decrease within Latin America was driven by lower specialty and alkaline battery sales volume across the region. The $7 million, or 5%, decrease in pet supplies sales is primarily attributable to continued softness in the aquatics business due to macroeconomic factors. Electric shaving and grooming products increased $3 million, or 6%, primarily due to increased sales within Europe as a result of successful product launches. Electric personal care sales increased $8 million, or 18%, primarily due to increased sales in North America. Home and garden control product sales increased $13 million, or 17%, primarily attributable to increased distribution with major customers. The $4 million, or 19%, decrease in portable lighting sales was primarily driven by large volume to a major customer that occurred during our first fiscal quarter of 2011.

During the Fiscal 2011 Six Months, global consumer battery sales decreased $5 million, or 1%, primarily driven by decreased Latin America net sales of $8 million, as mentioned above, decreased European net sales of $3 million and unfavorable foreign exchange translation of $8 million. These decreases were offset by increases within North America of $13 million as a result of increased sales with a major customer during our first fiscal quarter. The $11 million, or 4%, decrease in pet supplies sales is primarily attributable to the same factors mentioned above during the Fiscal 2011 Quarter. Electric shaving and grooming products increased $13 million, or 10%, primarily due to increased sales within North America and Europe of $5 million and $8 million, respectively, as a result of successful product launches. Electric personal care sales increased $14 million, or 12%, primarily due to increased sales in North America and Europe of $4 million and $12 million, respectively. Home and garden control product sales increased $13 million, or 13%, due to the same factors mentioned above during the Fiscal 2011 Quarter. Portable lighting products sales decreased slightly to $43 million during the Fiscal 2011 Six Months compared to $44 million during the Fiscal 2010 Six Months.

Gross Profit. Gross profit for the Fiscal 2011 Quarter increased $45 million to $255 million from $210 million in the Fiscal 2010 Quarter. The increase in gross profit is primarily attributable to the SB/RH Merger, which contributed $39 million of gross profit in the Fiscal 2011 Quarter. Our gross profit margin for the Fiscal 2011 Quarter decreased to 37% from 39% in the Fiscal 2010 Quarter. The decrease in gross profit margin is attributable to an increase in input costs during the Fiscal 2011 Quarter and the change in overall product mix as a result of the SB/RH Merger. Gross profit for the Fiscal 2011 Six Months increased $161 million to $555 million from $394 million for the Fiscal 2010 Six Months. The increase in gross profit for the Fiscal 2011 Six Months is also attributable to the SB/RH Merger, which contributed $111 million of gross profit in the Fiscal 2011 Six Months, coupled with the non-recurrence of a $34 million inventory revaluation charge we recognized associated with our adoption of fresh-start reporting upon emergence from Chapter 11 of the Bankruptcy Code in August 2009. Inventory balances were revalued at August 30, 2009 resulting in an increase in such inventory balances of $49 million. As a result of the inventory revaluation, we recognized $34 million in additional cost of goods sold during the Fiscal 2010 Six Months. Our gross profit margin increased to 36% from 35% in the Fiscal 2010 Six Months. The increase in gross profit margin is also attributable to the inventory revaluation charge recognized in the Fiscal 2010 Six Months, which was partially offset by the factors mentioned above for the decline in gross profit margin during the Fiscal 2011 Quarter.

Selling, General & Administrative Expense. Selling, general and administrative expenses (“SG&A”) for the Fiscal 2011 Quarter increased $69 million to $233 million from $164 million for the Fiscal 2010 Quarter. The increase is primarily due to $30 million of SG&A for the addition of Russell Hobbs, a $5 million increase in acquisition and integration related charges principally related to the SB/RH Merger and $24 million of SG&A for the corporate expenses at HGI, which are reflected commencing June 16, 2010 (the date that common control was first established over Spectrum Brands and HGI) in the accompanying Condensed Consolidated Statements of Operations for the Fiscal 2011 Quarter and Six Months. The corporate expenses of HGI included $2 million of corporate overhead and $22 million of acquisition and project related expenses, which included $21 million of costs incurred for the FGL Acquisition.

SG&A expenses for the Fiscal 2011 Six Months increased $138 million to $468 million from $330 million for the Fiscal 2010 Six Months. The increase is primarily due to $76 million in SG&A for the addition of Russell Hobbs, a $19 million increase in acquisition and integration related charges principally related to the SB/RH Merger and $28 million of SG&A for the corporate expenses of HGI. The corporate expenses of HGI included $5 million for corporate overhead expenses and $23 million of acquisition and project related expenses, which included $1 million related to the Spectrum Brands Acquisition, $21 million related to the FGL Acquisition and $1 million of other project related expenses.

Interest Expense. Interest expense for the Fiscal 2011 Quarter increased $34 million to $83 million from $49 million for the Fiscal 2010 Quarter. Included in the Fiscal 2011 Quarter interest expense is $24 million related to the write off of unamortized debt issuance costs and debt discount and a prepayment penalty of $7 million related to Spectrum Brands’ senior secured term loan (the “Term Loan”) that was refinanced at a lower interest rate on February 1, 2011 and $10 million of interest expense on HGI’s 10.625% Notes, which were issued on November 15, 2010. Interest expense for the Fiscal 2011 Six Months increased $43 million to $141 million from $98 million for the Fiscal 2010 Six Months. The increase is attributed to the $31 million of additional charges related to the Term Loan refinancing during the Fiscal 2011 Quarter coupled with accelerated amortization of $4 million related to a $70 million Term Loan prepayment and $15 million related to HGI’s 10.625% Notes.

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